Opinion
23106.
SUBMITTED SEPTEMBER 15, 1965.
DECIDED OCTOBER 7, 1965.
Equitable petition. DeKalb Superior Court. Before Judge Peeler.
William D. Zachary, Drennan Brannon, Roy S. Drennan, for plaintiff in error.
Edward D. Wheeler, O. E. Williams, contra.
Where the defendant stood silently by and permitted the plaintiff to purchase property to which she had been given a warranty deed by her husband without disclosing her title to the plaintiff, the defendant is guilty of such fraud as estops her from setting up such title against the plaintiff.
SUBMITTED SEPTEMBER 15, 1965 — DECIDED OCTOBER 7, 1965.
Rubye May Anderson brought her equitable suit against Mary Manning in the DeKalb Superior Court. Her petition as amended alleged: that the defendant's husband, Hollis B. Manning (hereinafter referred to as the deceased), died intestate leaving no estate; that in 1952 he was the owner of certain described real estate on which he gave a deed to secure a debt evidenced by a note to an investment corporation; that the note and security deed were transferred to the Brooklyn Savings Bank (hereinafter referred to as the bank); that in 1954 the deceased executed a warranty deed, which was duly recorded, purporting to convey the property to his wife; that the plaintiff had no knowledge of the warranty deed until after deceased's death; that in 1959 and 1960 the defendant and the deceased jointly executed two notes to Certified Finance Company (hereinafter referred to as Certified) and accompanied these notes with deeds to secure debt on the property in question.
The petition then alleged: that the deceased defaulted in his payments to the bank which instituted foreclosure proceedings and that Certified also threatened to foreclose; that the deceased was an employee of the plaintiff and appealed to her to help save the property by accepting a mortgage in return for her advancing money to him; that the plaintiff would not accept a mortgage but agreed with the deceased, in return for his executing a deed to the property to her, to pay the amount necessary to stop the foreclosure, to pay off the indebtedness to Certified and to pay the monthly payments to the bank for a period not in excess of three years, at or prior to which time the deceased could repay her with interest and redeem the property; that the defendant was present when the negotiations between the plaintiff and the deceased were in progress; that the defendant heard the deceased pleading with the plaintiff to make him the advances and was present when the plaintiff set out the terms under which she would do so; that the defendant was present when the negotiations were completed and the deed to the plaintiff was executed; that the defendant participated in the negotiations by also pleading with the plaintiff to make the advances and failed to inform the plaintiff that she (the defendant) had record title to the property; that the deceased concealed from the plaintiff the fact he had executed and recorded a deed to the defendant and represented the property was free of liens and encumbrances except for those held by the bank and Certified; that relying on these assurances that the deceased had good marketable title, the plaintiff made no examination of the title.
The petition further alleged: that the plaintiff accepted a deed dated January 9, 1961, from the deceased and paid off the balance due Certified and amount past due to the bank and made monthly payments to the bank beginning February 25 through December, 1963; that under their agreement the deceased was to occupy the property until January 1, 1963, at which time he had the option to re-acquire the property by re-imbursing the plaintiff for all the advances plus 7% interest; that the defendant knew of these transactions but did not inform the plaintiff the deceased had previously given her a deed; that the defendant was estopped by her conduct in remaining silent from asserting title adverse to the plaintiff or raising any issue as to the plaintiff's title, but if not so the plaintiff is equitably subrogated to the extent of all funds advanced by her; that the defendant has continued to occupy the premises following her husband's death; that the defendant has no properties or assets to respond to any judgment rendered against her.
The prayers were: that the plaintiff be decreed the owner of the property and the defendant be decreed to have no interest in the property since she is estopped from asserting any claim against the plaintiff; that if the plaintiff be not decreed owner of the property she be equitably subrogated to the rights of the holder of the junior mortgage, Certified, and to the rights of the holder of the first mortgage, the bank, to the extent of payments made.
The plaintiff excepts and assigns error to the judgment sustaining the renewed general demurrer to her petition.
The question confronting us here is: Was the defendant, by participating in the negotiations, by being present during the entire transaction here involved and by failing to reveal her purported interest in the property, estopped from asserting title adverse to that of the plaintiff, where the defendant's muniment of title was recorded and the plaintiff, admittedly relying on assurances made by the deceased, made no investigation of title?
The defendant contends that the plaintiff had notice of the defendant's interest since "the defendant's possession of the land under a duly recorded warranty deed was notice to the plaintiff and to the world of the defendant's claim of title." Poore v. Poore, 210 Ga. 371, 372 ( 80 S.E.2d 294); Blue Ridge Apart, Co. v. Telfair Stockton Co., 205 Ga. 552 ( 54 S.E.2d 608). Hence, under Code § 38-115 the plaintiff had a "convenient means of acquiring . . . knowledge" of the true title, and thus the defendant would not be subject to estoppel.
The plaintiff relies on Code § 105-304 which provides: "One who silently stands by and permits another to purchase his property without disclosing his title is guilty of such a fraud as estops him from subsequently setting up such title against the purchaser." In construing this Code section this court has found that it is inapplicable where a party had actual knowledge of the rights of the other party who remained silent or where such party relied upon his own investigation or was not shown to have placed any reliance on the statement, action or inaction of the one claimed to be estopped. Brown v. Tucker, 47 Ga. 485; Stonecipher v. Kear, 131 Ga. 688 (5) ( 63 S.E. 215, 127 ASR 248); Williamson v. Floyd County c. Assn., 216 Ga. 760 (2) ( 119 S.E.2d 344).
However, in analogous factual situations to that of the instant case this court, in harmonizing Code §§ 105-304 and 38-115, has consistently held that a recorded deed was not necessarily such "convenient means of acquiring knowledge" of the title, within the contemplation of Code § 38-115, as to abrogate the effect of Code § 105-304 on one who remains silent while a third party represents to another that he owns certain property which in actuality belongs to the aphonic one. Markham v. O'Connor, 52 Ga. 183 (21 ASR 249); Lane v. Newton, 140 Ga. 415 (4) ( 78 S.E. 1082); Roop Grocery Co. v. Gentry, 195 Ga. 736, 746 ( 25 S.E.2d 705). In the Gentry case is the pronouncement: "The fact that the deed under which the wife claimed title may have been based upon a valuable consideration and duly recorded would not necessarily prevent the purchaser in such case from relying upon the principle of estoppel, if he was in fact ignorant of the true title. . . . The principle stated in the Code, § 105-304, does not depend for its operation upon the existence or absence of mere constructive notice, nor will such record necessarily constitute `convenient means of acquiring such knowledge,' within the meaning of § 38-115."
The trial judge erred in sustaining the demurrer to the petition.
Judgment reversed. All the Justices concur, except Mobley, J., not participating for providential cause.